Benefits and Inheritance Money

GreenManalishi

Hello there,

I’m here to ask for help with a benefit related issue. Before I continue, I should first mention that I’m writing this post on behalf of my parents who are less tech-savvy and find this kind of problem particularly stressful. With that said, I’ll explain the situation in as much detail as I can give from my position. Advice or information on any aspect of the issue would be sincerely appreciated.

Firstly, my Dad is disabled and is in receipt of a number of benefits, these being; Disability Living Allowance, Housing Benefit, Council Tax Benefit and Income Support. My Mum is also included in my Dad’s Income Support claim as a couple. However, as the title suggests, my Dad is set to inherit some money from the recent death of his mother and this will affect their benefits.

It’s estimated that my Dad will receive something in the region of £30,000 from the sale of my Nan’s flat, so my parents will be cut off from all benefits apart from the Disability Living Allowance as £16,000 in income or capital is the limit at which benefit entitlement stops. I know this is a fairly common issue so I have done my own research and come up with some basic information on what to expect but there are some concerns which I haven’t yet found answers to and I am hoping that I will find help here.

My parent’s primary concerns lie with how they can legitimately spend the money without being accused of deliberately trying to reduce their capital to get back on benefits. The fact is that after living on benefits for so long, there has been a huge build up of legitimate purchases that have been put on hold because they could never be afforded on a week-to-week basis. My parents see this inheritance as a once in a lifetime opportunity to spend money on things that as a family we genuinely need, but they are frightened that if they buy the wrong thing that it’ll affect their future entitlement to benefits.

To give some perspective, I’m not talking about luxuries such as the latest big TV or expensive holidays. To me at least, it’s obvious that a low-income lifestyle has made them incapable of lavish or wasteful spending. Rather, they have so far proposed to spend money on things like a car, which we couldn’t afford to replace when the last one stopped being roadworthy, and replacing their living room furniture which is years old and falling apart. As well as this, they would like to make some modest improvements to the kitchen, such as replacing the cooker and fridge freezer which are both old, damaged and probably won’t last much longer. I won’t bore you with a list of home improvements, but I hope this demonstrates the sort of expenditures that they hope to be able to make. They aren’t extravagant and they’re the kind of entirely practical expenses that most families would afford themselves without second thought. In this case, however, they have been put on hold and built up over a period of many years.

In another category of its own is debt, which they would like to pay off while they still have the money. My parents have been sensible with debt and kept spending down to what they could afford to repay, but they have outstanding debts with gas and electrical providers to a total of around £2000. This is mainly due to the fact that until recently they weren’t aware of any debt, because their water, gas and electric bills are supposed to be deducted from my Dad’s benefits before he receives them. A small amount of his benefits are deducted weekly to repay the debt, but when their benefits are revoked they will start coming to him for the money so he’d like to pay it off as fast as possible. They have also expressed a desire to give some money to my brother and me who are both studying at university and haven’t had any financial support from them so far, so they’d like to know whether this is within their power.

So, the reason I bring this to the MoneySavingExpert forum is that my parents need to know what counts as legitimate expenditure in these circumstances. They want to be lawful and avoid anything that would be deemed fraudulent, but the reality of their situation means that they could feasibly reduce their capital to less than £16,000 within a fairly short period of time through practical expenses only.

This also leads me to inquire how the benefits office deal with what must be a fairly common issue. Will my parent’s finances be scrutinised as soon as they declare the inheritance to the DWP or will they only investigate after my parents have to inevitably reopen their benefit claims? Will their finances also be monitored after they reopen their claims as they’ll presumably still have between £6-16,000?

As I said, this is unfortunately a one-off opportunity for my parents to fix some long standing problems and while they want to stay clearly within the law, they also want to ensure that the money goes as far as possible. Having seen some of the stories of people in similar situations who suffered due to inexperience with benefit rules they would like to avoid this altogether and make sure that they don’t adversely affect the benefits that they are entitled to and rely on. Inheriting money as a final gift should be considered a blessing but in this case it has regrettably caused a lot of stress and anxiety for both of my parents.

I’ve asked a handful of different questions so I’m not expecting anything like a complete answer to this issue, but any advice or information would be much appreciated. I couldn’t find any government approved documentation on this sort of thing, so any links from those better informed would also be very helpful. Thank you for reading and for any help you can give.

Indie_Kid

With debt, you can't come into money, go off benefits, pay debt off in full (unless it's reached court) and then expect to be able to claim benefits. Minimum repayments are fine.

Whatever they buy, they need to receipts for.

welshmoneylover

GreenManalishi wrote: »

Hello there,

I’m here to ask for help with a benefit related issue. Before I continue, I should first mention that I’m writing this post on behalf of my parents who are less tech-savvy and find this kind of problem particularly stressful. With that said, I’ll explain the situation in as much detail as I can give from my position. Advice or information on any aspect of the issue would be sincerely appreciated.

Firstly, my Dad is disabled and is in receipt of a number of benefits, these being; Disability Living Allowance, Housing Benefit, Council Tax Benefit and Income Support. My Mum is also included in my Dad’s Income Support claim as a couple and acts as his carer. However, as the title suggests, my Dad is set to inherit some money from the recent death of his mother and this will affect their benefits.

It’s estimated that my Dad will receive something in the region of £30,000 from the sale of my Nan’s flat, so my parents will be cut off from all benefits apart from the Disability Living Allowance as £16,000 in income or capital is the limit at which benefit entitlement stops. I know this is a fairly common issue so I have done my own research and come up with some basic information on what to expect but there are some concerns which I haven’t yet found answers to and I am hoping that I will find help here.

My parent’s primary concerns lie with how they can legitimately spend the money without being accused of deliberately trying to reduce their capital to get back on benefits. The fact is that after living on benefits for so long, there has been a huge build up of legitimate purchases that have been put on hold because they could never be afforded on a week-to-week basis. My parents see this inheritance as a once in a lifetime opportunity to spend money on things that as a family we genuinely need, but they are frightened that if they buy the wrong thing that it’ll affect their future entitlement to benefits.

To give some perspective, I’m not talking about luxuries such as the latest big TV or expensive holidays. To me at least, it’s obvious that a low-income lifestyle has made them incapable of lavish or even just unnecessary spending. Rather, they have so far proposed to spend money on things like a car, which we couldn’t afford to replace when the last one stopped being roadworthy, and replacing their living room furniture which is years old and falling apart. As well as this, they would like to make some modest improvements to the kitchen, such as replacing the cooker and fridge freezer which are both old, damaged and probably won’t last much longer. I won’t bore you with a list of home improvements, but I hope this demonstrates the sort of expenditures that they hope to be able to make. They aren’t extravagant and they’re the kind of entirely practical expenses that most families would afford themselves without second thought. In this case, however, they have been put on hold and built up over a period of many years.

In another category of its own is debt, which they would like to pay off while they still have the money. My parents have been sensible with debt and kept spending down to what they could afford to repay, but they have outstanding debts with gas and electrical providers to a total of around £2000. This is mainly due to the fact that until recently they weren’t aware of any debt, because their water, gas and electric bills are supposed to be deducted from my Dad’s benefits before he receives them. A small amount of his benefits are deducted weekly to repay the debt, but when their benefits are revoked they will start coming to him for the money so he’d like to pay it off as fast as possible. They have also expressed a desire to give some money to my brother and me who are both studying at university and haven’t had any financial support from them so far, so they’d like to know whether this is within their power.

So, the reason I bring this to the MoneySavingExpert forum is that my parents need to know what counts as legitimate expenditure in these circumstances. They want to be lawful and avoid anything that would be deemed fraudulent, but the reality of their situation means that they could feasibly reduce their capital to less than £16,000 within a fairly short period of time through practical expenses only.

This also leads me to inquire how the benefits office deal with what must be a fairly common issue. Will my parent’s finances be scrutinised as soon as they declare the inheritance to the DWP or will they only investigate after my parents have to inevitably reopen their benefit claims? Will their finances also be monitored after they reopen their claims as they’ll presumably still have between £6-16,000?

As I said, this is unfortunately a one-off opportunity for my parents to fix some long standing problems and while they want to stay clearly within the law, they also want to ensure that the money goes as far as possible. Having seen some of the stories of people in similar situations who suffered due to inexperience with benefit rules they would like to avoid this altogether and make sure that they don’t adversely affect the benefits that they are entitled to and rely on. Inheriting money as a final gift should be considered a blessing but in this case it has regrettably caused a lot of stress and anxiety for both of my parents.

I’ve asked a handful of different questions so I’m not expecting anything like a complete answer to this issue, but any advice or information would be much appreciated. I couldn’t find any government approved documentation on this sort of thing, so any links from those better informed would also be very helpful. Thank you for reading and for any help you can give.

Instead of trying to spend the money as quickly as possible, why don't they spend the money on day to day living expenses rather than expect the tax payer to pick up the tab?

I'd love some new furniture, cooker, car and give money to uni relatives, but, alas can't afford to do so.

By the time tax is taken from my pay packet to pay towards the living costs of those who claim benefits, I aint got a lot left :cool:

jamespir

welshmoneylover wrote: »

Instead of trying to spend the money as quickly as possible, why don't they spend the money on day to day living expenses rather than expect the tax payer to pick up the tab?

I'd love some new furniture, cooker, car and give money to uni relatives, but, alas can't afford to do so.

By the time tax is taken from my pay packet to pay towards the living costs of those who claim benefits, I aint got a lot left :cool:

youre in the wrong job then

Mojisola

Although it would seem sensible, they can't use the money to repay debts. They also can't give any money away.

Some of the purchases would be acceptable, especially if they can be further justified as needed by your father because of his disabilities, for instance, furniture that is easier for him to get out of or a new bed/mattress that makes his life easier.

There are no hard and fast rules about deprivation of capital. What is important is that spending is kept within reasonable levels and all receipts are kept.

No-one will keep a check on their spending while they are not claiming but they will need to explain their spending when they put in a new claim. If the cooker were to break down, then replacing it would be justified.

diable

don't they owe you £30k?

mossy

Hi Greenmanalishi, sorry to hear about your Nan. It sounds like your parents are being thoughtful and want to behave in an honest manner and use the money that they have been blessed with wisely and also be accountable. Regardless of whether some people are happy with others claiming benefits and having an amount of savings or spending money they have come into on refurbishments etc etc, the law states that you are legitimately allowed to have £16k of savings and still be eligible to receive housing benefit, so in all fairness it really is tough luck if some people don't like it and want to get their knickers in a twist and post unhelpful comments. Just saying....love love

When we've received housing benefit we have included a screen print of our bank account to show what the balance is and this has been sufficient.

Have you tried talking to their local council for help? Obviously they probably wouldn't be able to talk specifics but you could ask for some general advice.

Hope they manage to get it sorted out and I hope you get some more helpful and encouraging responses to your detailed and genuine request for help. :A

Mojisola

mossy wrote: »

I can't really help with any of your comments, although I don't see why your parents couldn't pay off any outstanding debts with energy suppliers or elsewhere. If it were me I'd absolutely clear those regardless of whether it would effect my eligibility to claim benefits again sooner. Surely it would make sense and be a good way to spend some of the money rather than have it hanging over their heads. Have you tried talking to their local council for help? Obviously they probably wouldn't be able to talk specifics but you could ask for some general advice.

Hope they manage to get it sorted out and I hope you get some more helpful and encouraging responses to your detailed and genuine request for help. :A

There would be no grey area here. Repaying debts that you aren't obliged to repay by a court is definitely seen as deprivation of capital and they would be assessed in the future as if they still had this money.

mossy

Mojisola wrote: »

There would be no grey area here. Repaying debts that you aren't obliged to repay by a court is definitely seen as deprivation of capital and they would be assessed in the future as if they still had this money.

Yeah, I'm really surprised by that as it would seem a sensible way to spend some of the money rather than having that debt hanging over their heads but hey ho.

I saw your post so I took that comment out of mine, but you were too quick for me!! lol

Incyder

just goes to show, money creates as many problems as it solves.
unless u come into hundreds of k.

GreenManalishi

welshmoneylover wrote:

Instead of trying to spend the money as quickly as possible, why don't they spend the money on day to day living expenses rather than expect the tax payer to pick up the tab?

I didn't say that they were trying to spend the money as quickly as possible and of course most of the money will mostly go towards living expenses. However, I know that spending money without thinking can cause huge problems for my family so I asked for advice on their behalf first.

If you had an income of £30,000, which is how the DWP will treat my parents, you would expect to be able to pay for more than just loosely defined 'living expenses'. The fact is, my Dad has a neurological disability and is incapable of work and that is why he uses our benefit system. That system is there to help those who can't help themselves and he falls squarely into that category, so please refrain from bolstering your fully abled, employable ego on our regrettable situation.

welshmoneylover wrote:

I'd love some new furniture, cooker, car and give money to uni relatives, but, alas can't afford to do so.

You may just have to wait for your own loved ones to die and leave you their inheritance like we did.

To the rest of the posters, thank you. Your replies have been genuinely helpful and are appreciated. The advice on debt is particularly helpful for us as it seems counter-intuitive to not be able to pay these off. Thanks again.